Judge throws out U of L's claims against law firm that advised foundation

LOUISVILLE, Ky. (WDRB) – The University of Louisville and its nonprofit foundation waited too long to sue Stites & Harbison, the Louisville law firm that used to represent the foundation, for its alleged role in enabling over-spending at the foundation during the James Ramsey era, a judge ruled earlier this month.

Jefferson Circuit Court Judge Judith McDonald-Burkman granted Stites’ motion to dismiss U of L’s claims against the firm, which were part of a lawsuit filed April 25, 2018.

The lawsuit claims Ramsey, who was president of the university and foundation for 14 years until 2016, and his top aides depleted the university’s endowment through excessive spending at the foundation for administrator compensation and other uses, and that Stites helped them in efforts to conceal the spending from the public record.

The university cited an example in its complaint, saying a Stites attorney and former Ramsey chief of staff Kathleen Smith “schemed” to hide extra compensation paid to administrators through University Holdings, a foundation subsidiary that got its funds by borrowing from the university’s endowment.

“I would like to make the paper trail to our holdings as obscure as possible,” Smith wrote to the Stites attorney, David Saffer, in a September 2013 email, according to the complaint.

U of L’s lead lawyer has estimated the damages at $70 million to $90 million.

But in a ruling dated Jan. 4, McDonald-Burkman agreed with Stites’ lawyers that U of L and the foundation should have been aware of potential problems at the foundation through extensive media coverage that began in 2015. The statute of limitations expired on claims against Stites, she ruled.

The decision does not apply to U of L’s claims against Ramsey and the other individuals U of L sued: Smith, former foundation board member Burt Deutsch, former foundation chief financial officer Jason Tomlinson and former university chief financial officer Michael Curtin.

“We don’t think (the ruling) will affect the pursuit of the other claims in the case,” said Andy Campbell, the Birmingham, Alabama lawyer handling the case for U of L and the foundation.

The U of L side has also asked McDonald-Burkman to allow an immediate appeal of her order rather than waiting for the rest of the case to be resolved.

The case is now in the “discovery” phase with parties exchanging records and taking depositions, after McDonald-Burkman last year denied Ramsey’s request to throw out the claims against him.

Chris Otts reports for WDRB.com about business and economic topics, higher education and local / state government. He joined WDRB News in 2013 after seven years with The Courier-Journal. Got a tip? Chris is at 502-585-0822 and cotts@wdrb.com.

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